Expeditors International of Washington, Inc. (NASDAQ:EXPD) today
announced second quarter 2021 financial results including the
following highlights compared to the same quarter of 2020:
- Diluted Net Earnings Attributable to Shareholders per share
(EPS1) increased 69% to $1.84
- Net Earnings Attributable to Shareholders increased 72% to $316
million
- Operating Income increased 66% to $411 million
- Revenues increased 50% to $3.6 billion
- Airfreight tonnage volume and ocean container volume increased
37% and 34%, respectively
“We continued to move unprecedented volumes during the quarter,
as ocean and air buy/sell rates remained elevated and volatile,
capacity was extremely tight, and supply chain disruptions showed
no signs of abatement,” said Jeffrey S. Musser, President and Chief
Executive Officer. “Our entire company continues to perform at its
very best, with strong performance and growth across all of our
products. Because of ongoing supply/demand imbalances, as well as
labor and equipment shortages around the globe, shippers face
extraordinarily complex challenges throughout their supply chains.
Logistics is now top of mind at the highest levels in most
organizations. Unfortunately, there is no quick or simple fix to
any of these issues and every one of our transactions seems to
require significantly more attention and dedication. Whether it’s
an ocean container, a customs declaration, a fulfillment order in
one of our warehouses, or a high-touch, white-glove delivery for
one of our Transcon customers – just about everything we do
requires us to be more innovative, flexible, and alert to change in
the current operating environment. I want to express enormous
gratitude to our employees, who have continued to take care of our
customers throughout these challenges.
“During the quarter, we achieved new records in airfreight
tonnage and ocean container volumes, operating income and net
earnings. Buy and sell rates remained significantly higher than
pre-pandemic norms, as we worked with our carrier partners to
secure precious space for our customers. It has not been easy. Many
of the impediments to smoother trade flow, such as port congestion
and equipment shortages, were not appreciably better in Q2 than
they were in Q1.
“Currently, we do not foresee any meaningful improvements to the
operating environment over at least the remainder of the year, as
the global infrastructure for moving freight seems nearly stretched
to its limit. Robust demand is bumping up against capacity
constraints in the air and ocean markets, all of which is made more
challenging by limited warehouse space, staffing constraints, port
congestion, equipment dislocations, and driver shortages, not to
mention additional disturbances such as the closure of the Yantian
port due to a COVID-19 outbreak in May or the blockage of the Suez
Canal back in March.
“We will continue to do all that we can to help our customers
during such difficult times. While we remain optimistic that
conditions will improve over time, we are unable to predict when
that might take place, or how even the recovery might be, and we
believe that demand will likely continue to outstrip capacity in
both air and ocean for the near term, keeping buy/sell rates
unsettled for at least the duration of 2021.”
Bradley S. Powell, Senior Vice President and Chief Financial
Officer, added, “The quarter just ended provides the first
meaningful comparisons to a strong year-ago quarter in 2020, when
we first started to see the results of our improved performance
during the unprecedented conditions brought on by the global
COVID-19 pandemic. At that time, we were just starting to
demonstrate our ability to quickly adapt to a radically different
operating environment of high demand for very specific products in
certain lanes at a time when the vast majority of air capacity had
been removed and most of our people were settling in to working
from home. A year later, as we are cautiously beginning to bring
our people back on site, we are navigating a multitude of
challenges and performing at levels we have never seen before
across the company and in all of our products. We are busier than
ever, generating growth in revenue, operating income, and earnings
that is well ahead of expenses, as we continue to learn how to
operate in this environment. While we believe the current
environment is likely to remain at least through the end of 2021, I
would again caution that we are unable to predict how long these
ongoing conditions will persist or the impact they will have on our
future operations. Regardless, we will continue to make important
investments in people, processes, and technology, as well as to
invest in our strategic efforts to explore new areas for profitable
growth.”
Expeditors is a global logistics company headquartered in
Seattle, Washington. The Company employs trained professionals in
176 district offices and numerous branch locations located on six
continents linked into a seamless worldwide network through an
integrated information management system. Services include the
consolidation or forwarding of air and ocean freight, customs
brokerage, vendor consolidation, cargo insurance, time-definite
transportation, order management, warehousing and distribution and
customized logistics solutions.
____________________
1Diluted earnings attributable to
shareholders per share.
NOTE: See Disclaimer on Forward-Looking
Statements in this release.
Expeditors International of Washington,
Inc.
Second Quarter 2021 Earnings Release,
August 3, 2021
Financial Highlights for the three and
six months ended June 30, 2021 and 2020 (Unaudited)
(in 000's of US dollars except per share
data)
Three months ended June
30,
Six months ended June
30,
2021
2020
% Change
2021
2020
% Change
Revenues3
$
3,609,093
$
2,411,078
50%
$
6,807,913
$
4,254,845
60%
Directly related cost of transportation
and other expenses1,3
$
2,598,633
$
1,661,487
56%
$
4,845,917
$
2,890,118
68%
Salaries and other operating
expenses2
$
599,815
$
501,965
19%
$
1,165,836
$
958,046
22%
Operating income
$
410,645
$
247,626
66%
$
796,160
$
406,681
96%
Net earnings attributable to
shareholders
$
316,372
$
183,869
72%
$
603,592
$
306,213
97%
Diluted earnings attributable to
shareholders per share
$
1.84
$
1.09
69%
$
3.52
$
1.80
96%
Basic earnings attributable to
shareholders per share
$
1.87
$
1.10
70%
$
3.57
$
1.83
95%
Diluted weighted average shares
outstanding
171,677
169,290
171,660
170,382
Basic weighted average shares
outstanding
169,210
166,767
169,140
167,751
____________________
1Directly related cost of transportation
and other expenses totals Operating Expenses from Airfreight
services, Ocean freight and ocean services and Customs brokerage
and other services as shown in the Condensed Consolidated
Statements of Earnings.
2Salaries and other operating expenses
totals Salaries and related, Rent and occupancy, Depreciation and
amortization, Selling and promotion and Other as shown in the
Condensed Consolidated Statements of Earnings.
3Beginning in the first quarter 2019, the
Company made changes to its process and presentation of freight
services revenue and directly related transportation operating
expenses with the objective that at each reporting level (reporting
entity, segment and consolidated level) the gross revenue and
associated directly related operating expenses be representative of
the location where the services were performed, the operating
expenses were incurred and where the revenues were earned. During
the second quarter 2021, management identified and corrected
certain immaterial errors in the Company’s historical financial
statements primarily related to this process that was utilized
through the first quarter of 2021. The process missed an
intercompany elimination of revenues and an equal and offsetting
amount of directly related transportation expenses, principally
impacting airfreight services in North Asia. The errors overstated
revenues and directly related transportation operating expenses by
equal amounts in the consolidated statements of earnings. The
errors had no impact on operating income, net earnings, and
earnings per share nor any other financial statement amount.
Further, the errors had no impact on the balance sheets, statements
of shareholders’ equity, other comprehensive income and cash flows.
These errors do not affect any of the metrics used to calculate or
evaluate management’s compensation and had no impact on bonuses,
commissions, share-based compensation or any other employee
remuneration. Historical amounts have been revised and are
presented on a comparable basis.
During the three and six months ended June 30, 2021, we
repurchased 0.5 million and 1.4 million shares of common stock at
an average price of $124.94 and $104.20 per share, respectively.
During the three and six months ended June 30, 2020, we repurchased
0.4 million and 4.4 million shares of common stock at an average
price of $77.46 and $71.41 per share, respectively.
Employee Full-time Equivalents
as of June 30,
2021
2020
North America
6,949
6,749
Europe
3,700
3,419
North Asia
2,416
2,413
South Asia
1,671
1,654
Middle East, Africa and India
1,496
1,528
Latin America
781
823
Information Systems
968
971
Corporate
399
380
Total
18,380
17,937
Disclaimer on
Forward-Looking Statements:
NOTE: See Disclaimer on Forward-Looking
Statements in this release.
Second quarter year-over-year
percentage increase in:
2021
Airfreight kilos
Ocean freight FEU
April
29%
34%
May
39%
36%
June
46%
30%
Quarter
37%
34%
Investors may submit written questions via e-mail to:
investor@expeditors.com. Questions received by the end of business
on August 6, 2021 will be considered in management's 8-K “Responses
to Selected Questions.”
Disclaimer on Forward-Looking
Statements:
Certain statements contained in this news release are
“forward-looking statements,” based on management’s views with
respect to future events and underlying assumptions that involve
risks and uncertainties. These forward-looking statements include
statements regarding the future stabilization of supply/demand
imbalance and rate volatility; the continued unsettled operating
environment due to continued scarce air and ocean capacity;
elevated air and ocean pricing and an increase in demand for such
services; port congestion; equipment imbalances; trade disruptions;
rising fuels costs; and the uneven lifting of the COVID-19 pandemic
restrictions. Future financial performance could differ materially
because of factors such as: our ability to leverage the strength of
our carrier relationships to secure space; the strength of our
non-asset-based operating model; our expectation that the
supply/demand imbalance and rate volatility will continue for the
remainder of 2021 and will stabilize over time; our ability to
re-open our offices for return-to-work; our ability to continue to
enhance our productivity; our expectation that the current
unprecedented operating conditions will not persist long-term; our
ability to invest in our strategic efforts to explore new areas for
profitable growth; and our ability to remain a strong, healthy,
unified and resilient organization. The COVID-19 pandemic could
have the effect of heightening many of the other risks described in
Item 1A of our Annual Report on Form 10-K, including, without
limitation, those related to the success of our strategy and desire
to maintain historical unitary profitability, our ability to
attract and retain customers, our ability to manage costs,
interruptions to our information technology systems, the ability of
third-party providers to perform and potential litigation as
updated by our reports on Form 10-Q, filed with the Securities and
Exchange Commission. These and other factors are discussed in the
Company’s regulatory filings with the Securities and Exchange
Commission, including those in “Item 1A. Risk Factors” of the
Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2020. The forward-looking statements contained in this
news release speak only as of this date and the Company does not
assume any obligation to update them except as required by law.
EXPEDITORS INTERNATIONAL OF
WASHINGTON, INC.
AND SUBSIDIARIES
Condensed Consolidated Balance
Sheets
(In thousands, except per share
data)
(Unaudited)
June 30, 2021
December 31, 2020
Assets:
Current Assets:
Cash and cash equivalents
$
1,674,121
$
1,527,791
Accounts receivable, less allowance for
credit loss of $6,104 at June 30, 2021 and $5,579 at December 31,
2020
2,647,516
1,998,055
Deferred contract costs
534,692
327,448
Other
128,933
110,250
Total current assets
4,985,262
3,963,544
Property and equipment, less accumulated
depreciation and amortization of $534,790 at June 30, 2021 and
$516,988 at December 31, 2020
499,282
506,425
Operating lease right-of-use assets
443,708
432,723
Goodwill
7,927
7,927
Other assets, net
16,992
16,884
Total assets
$
5,953,171
$
4,927,503
Liabilities:
Current Liabilities:
Accounts payable
$
1,408,572
$
1,136,859
Accrued expenses, primarily salaries and
related costs
319,696
257,021
Contract liabilities
619,140
379,722
Current portion of operating lease
liabilities
80,210
74,004
Federal, state and foreign income
taxes
57,608
45,437
Total current liabilities
2,485,226
1,893,043
Noncurrent portion of operating lease
liabilities
370,333
364,185
Deferred federal and state income taxes,
net
13,961
7,048
Commitments and contingencies
Shareholders’ Equity:
Preferred stock, none issued
—
—
Common stock, par value $0.01 per share.
Issued and outstanding: 169,169 shares at June 30, 2021 and 169,294
shares at December 31, 2020
1,692
1,693
Additional paid-in capital
79,357
157,496
Retained earnings
3,104,471
2,600,201
Accumulated other comprehensive loss
(106,066
)
(99,753
)
Total shareholders’ equity
3,079,454
2,659,637
Noncontrolling interest
4,197
3,590
Total equity
3,083,651
2,663,227
Total liabilities and equity
$
5,953,171
$
4,927,503
EXPEDITORS INTERNATIONAL OF
WASHINGTON, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements
of Earnings
(In thousands, except per share
data)
(Unaudited)
Three months ended June
30,
Six months ended June
30,
2021
2020
2021
2020
Revenues:
Airfreight services
$
1,523,569
$
1,269,654
$
2,849,484
$
1,925,252
Ocean freight and ocean services
1,098,550
489,385
2,052,462
980,725
Customs brokerage and other services
986,974
652,039
1,905,967
1,348,868
Total revenues
3,609,093
2,411,078
6,807,913
4,254,845
Operating Expenses:
Airfreight services
1,136,328
932,137
2,090,872
1,398,865
Ocean freight and ocean services
862,251
361,272
1,604,686
725,668
Customs brokerage and other services
600,054
368,078
1,150,359
765,585
Salaries and related
481,186
395,107
933,291
737,147
Rent and occupancy
45,366
41,375
90,646
83,899
Depreciation and amortization
12,675
14,109
25,662
26,769
Selling and promotion
3,172
3,113
6,242
11,356
Other
57,416
48,261
109,995
98,875
Total operating expenses
3,198,448
2,163,452
6,011,753
3,848,164
Operating income
410,645
247,626
796,160
406,681
Other Income (Expense):
Interest income
2,188
2,559
4,134
7,366
Other, net
2,649
797
5,649
4,181
Other income, net
4,837
3,356
9,783
11,547
Earnings before income taxes
415,482
250,982
805,943
418,228
Income tax expense
98,508
66,794
201,019
111,258
Net earnings
316,974
184,188
604,924
306,970
Less net earnings attributable to the
noncontrolling interest
602
319
1,332
757
Net earnings attributable to
shareholders
$
316,372
$
183,869
$
603,592
$
306,213
Diluted earnings attributable to
shareholders per share
$
1.84
$
1.09
$
3.52
$
1.80
Basic earnings attributable to
shareholders per share
$
1.87
$
1.10
$
3.57
$
1.83
Weighted average diluted shares
outstanding
171,677
169,290
171,660
170,382
Weighted average basic shares
outstanding
169,210
166,767
169,140
167,751
EXPEDITORS INTERNATIONAL OF
WASHINGTON, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements
of Cash Flows
(In thousands)
(Unaudited)
Three months ended June
30,
Six months ended June
30,
2021
2020
2021
2020
Operating Activities:
Net earnings
$
316,974
$
184,188
$
604,924
$
306,970
Adjustments to reconcile net earnings to
net cash from operating activities:
Provisions for losses on accounts
receivable
1,090
2,389
2,289
4,209
Deferred income tax expense
1,850
9,287
10,001
4,148
Stock compensation expense
30,909
21,638
42,094
32,794
Depreciation and amortization
12,675
14,109
25,662
26,769
Other, net
346
118
897
551
Changes in operating assets and
liabilities:
Increase in accounts receivable
(410,783
)
(185,055
)
(663,697
)
(168,375
)
Increase in accounts payable and accrued
expenses
100,118
106,760
333,271
107,677
Increase in deferred contract costs
(150,382
)
(2,333
)
(221,640
)
(18,401
)
Increase (decrease) in contract
liabilities
174,504
(595
)
254,094
20,606
(Decrease) increase in income taxes
payable, net
(47,994
)
20,154
(1,356
)
30,642
Decrease (increase) in other, net
1,164
16,061
(324
)
4,131
Net cash from operating activities
30,471
186,721
386,215
351,721
Investing Activities:
Purchase of property and equipment
(6,539
)
(22,114
)
(14,930
)
(28,241
)
Other, net
138
(68
)
104
(211
)
Net cash from investing activities
(6,401
)
(22,182
)
(14,826
)
(28,452
)
Financing Activities:
Proceeds from issuance of common stock
22,711
29,187
42,468
52,586
Repurchases of common stock
(62,472
)
(30,985
)
(148,469
)
(314,225
)
Dividends paid
(98,387
)
(86,815
)
(98,387
)
(86,815
)
Payments for taxes related to net share
settlement of equity awards
(13,893
)
(9,170
)
(15,168
)
(10,566
)
Net cash from financing activities
(152,041
)
(97,783
)
(219,556
)
(359,020
)
Effect of exchange rate changes on cash
and cash equivalents
8,699
1,726
(5,503
)
(14,285
)
Change in cash and cash equivalents
(119,272
)
68,482
146,330
(50,036
)
Cash and cash equivalents at beginning of
period
1,793,393
1,111,973
1,527,791
1,230,491
Cash and cash equivalents at end of
period
$
1,674,121
$
1,180,455
$
1,674,121
$
1,180,455
Taxes Paid:
Income taxes
$
143,959
$
38,504
$
190,536
$
73,808
EXPEDITORS INTERNATIONAL OF
WASHINGTON, INC.
AND SUBSIDIARIES
Business Segment Information
(In thousands)
(Unaudited)
UNITED STATES
OTHER
NORTH AMERICA
LATIN AMERICA
NORTH ASIA
SOUTH ASIA
EUROPE
MIDDLE EAST, AFRICA AND
INDIA
ELIMI- NATIONS
CONSOLI- DATED
For the three months ended June 30,
2021:
Revenues
$
997,567
101,465
46,981
1,309,382
417,718
544,949
192,186
(1,155
)
3,609,093
Directly related cost of transportation
and other expenses1
$
566,882
59,311
25,952
1,086,641
335,219
376,856
148,290
(518
)
2,598,633
Salaries and other operating expenses2
$
241,121
31,300
14,735
106,812
49,046
123,408
34,026
(633
)
599,815
Operating income
$
189,564
10,854
6,294
115,929
33,453
44,685
9,870
(4
)
410,645
Identifiable assets at period end
$
2,972,363
196,558
102,296
1,114,475
377,370
929,706
291,406
(31,003
)
5,953,171
Capital expenditures
$
2,905
64
72
400
532
2,100
466
—
6,539
Equity
$
2,163,114
80,802
36,316
318,111
146,583
255,006
128,148
(44,429
)
3,083,651
For the three months ended June 30,
2020:
Revenues3
$
639,226
73,679
37,553
984,715
217,152
358,060
101,571
(878
)
2,411,078
Directly related cost of transportation
and other expenses1, 3
$
354,619
40,814
22,701
775,572
153,194
242,170
72,868
(451
)
1,661,487
Salaries and other operating expenses2
$
207,703
25,283
12,112
97,171
39,184
95,757
25,188
(433
)
501,965
Operating income
$
76,904
7,582
2,740
111,972
24,774
20,133
3,515
6
247,626
Identifiable assets at period end
$
1,886,463
170,873
72,912
669,335
213,007
581,988
221,381
(5,782
)
3,810,177
Capital expenditures
$
19,076
1,148
216
385
182
993
114
—
22,114
Equity
$
1,399,124
71,165
29,758
306,022
108,777
168,060
116,279
(37,587
)
2,161,598
UNITED STATES
OTHER NORTH AMERICA
LATIN AMERICA
NORTH ASIA
SOUTH ASIA
EUROPE
MIDDLE EAST, AFRICA AND
INDIA
ELIMI- NATIONS
CONSOLI- DATED
For the six months ended June 30,
2021:
Revenues3
$
1,872,957
195,582
91,845
2,518,430
767,484
1,011,282
352,692
(2,359
)
6,807,913
Directly related cost of transportation
and other expenses1, 3
$
1,069,517
112,361
52,652
2,054,170
605,163
683,765
269,399
(1,110
)
4,845,917
Salaries and other operating expenses2
$
479,819
57,037
27,112
213,732
92,211
232,863
64,301
(1,239
)
1,165,836
Operating income
$
323,621
26,184
12,081
250,528
70,110
94,654
18,992
(10
)
796,160
Identifiable assets at period end
$
2,972,363
196,558
102,296
1,114,475
377,370
929,706
291,406
(31,003
)
5,953,171
Capital expenditures
$
5,930
186
125
757
1,111
5,654
1,167
—
14,930
Equity
$
2,163,114
80,802
36,316
318,111
146,583
255,006
128,148
(44,429
)
3,083,651
For the six months ended June 30,
2020:
Revenues3
$
1,289,631
154,910
75,444
1,481,872
383,233
665,020
206,553
(1,818
)
4,254,845
Directly related cost of transportation
and other expenses1, 3
$
728,578
86,104
46,467
1,160,075
271,515
450,488
147,787
(896
)
2,890,118
Salaries and other operating expenses2
$
433,647
48,995
23,861
154,604
69,092
177,611
51,138
(902
)
958,046
Operating income
$
127,406
19,811
5,116
167,193
42,626
36,921
7,628
(20
)
406,681
Identifiable assets at period end
$
1,886,463
170,873
72,912
669,335
213,007
581,988
221,381
(5,782
)
3,810,177
Capital expenditures
$
23,573
1,209
318
710
370
1,638
423
—
28,241
Equity
$
1,399,124
71,165
29,758
306,022
108,777
168,060
116,279
(37,587
)
2,161,598
1Directly related cost of transportation
and other expenses totals Operating Expenses from Airfreight
services, Ocean freight and ocean services and Customs brokerage
and other services as shown in the Condensed Consolidated
Statements of Earnings.
2Salaries and other operating expenses
totals Salaries and related, Rent and occupancy, Depreciation and
amortization, Selling and promotion and Other as shown in the
Condensed Consolidated Statements of Earnings.
3Beginning in the first quarter 2019, the
Company made changes to its process and presentation of freight
services revenue and directly related transportation operating
expenses with the objective that at each reporting level (reporting
entity, segment and consolidated level) the gross revenue and
associated directly related operating expenses be representative of
the location where the services were performed, the operating
expenses were incurred and where the revenues were earned. During
the second quarter 2021, management identified and corrected
certain immaterial errors in the Company’s historical financial
statements primarily related to this process that was utilized
through the first quarter of 2021. The process missed an
intercompany elimination of revenues and an equal and offsetting
amount of directly related transportation expenses, principally
impacting airfreight services in North Asia. The errors overstated
revenues and directly related transportation operating expenses by
equal amounts in the consolidated statements of earnings. The
errors had no impact on operating income, net earnings, and
earnings per share nor any other financial statement amount.
Further, the errors had no impact on the balance sheets, statements
of shareholders’ equity, other comprehensive income and cash flows.
Historical amounts for business segment information have been
revised and are presented on a comparable basis.
The Company’s consolidated financial
results in the three and six months ended June 30, 2021 and 2020
were each significantly impacted by the effects of the global
pandemic in divergent ways. In the first and second quarter of
2021, the Company experienced strong volumes and high average sell
and buy rates as a result of imbalances between demand and carrier
capacity and continuing effects of disruptions in supply chains
originating in measures to combat the pandemic in 2020.
This is in contrast with slower activity
in North Asia in the first quarter of 2020 as the pandemic resulted
in temporary closures and limited operations in the Company’s China
offices. Shipments were also rerouted or delayed by customers and
service providers as they were taking their own precautionary
measures. This was followed by significant increases in airfreight
services revenues and related expenses, in the second quarter of
2020, as a result of demand for time-sensitive delivery of
technology equipment and medical equipment and supplies from China,
which combined with reductions in airfreight supply resulted in
significantly higher average buy and sell rates.
These impacts are affecting all of the
Company’s geographical segments and most notably the year-over-year
comparability of the North Asia segment. For the three months ended
June 30, 2021 and 2020, the People's Republic of China, including
Hong Kong, represented 29% and 34%, respectively, of the Company’s
total revenues and 22% and 38%, respectively, of the total
operating income. For the six months ended June 30, 2021 and 2020,
the People's Republic of China, including Hong Kong, represented
29% of the Company’s total revenues and 24% and 33%, respectively,
of the total operating income.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210803005285/en/
Jeffrey S. Musser President and Chief Executive Officer (206)
674-3433
Bradley S. Powell Senior Vice President and Chief Financial
Officer (206) 674-3412
Geoffrey Buscher Director - Investor Relations (206)
892-4510
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